Financial Report at December 31, 2010 Volume 1
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Action, 1 2006-2009 figures restated excluding Pirelli RE and Pirelli & C. S.p.A. Consolidated Figures Pirelli Broadband Solutions (discontinued operations) Pirelli Tyre SALES1 EBIT1; EBIT MARGIN1 SALES 4,772 EBIT; EBIT MARGIN VOLUME 1 € / mln 4,848 € / mln € / mln € / mln 4,162 4,100 3,950 3,993 8.4% 4,239 4,171 9.5% 4,010 4,067 7.8% 7.4% 8.7% 8.6% 408 7.7% 453 6.1% 330 358 298 342 250 309 2.6% 3.7% 111 2006 2007 2008 2009 2010 151 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 ∆% yoy 8.7% 5.4% -1.5% -2.6% 19.5% Volume 3.9% 1.8% -6.0% -5.8% 7.3% ∆% ∆% Price/Mix 3.1% 4.7% 7.3% 4.2% 8.9% yoy +5.7% -1.6% -2.5% +19.2% yoy +10.7% -66.5% +126.0% +63.3% Revenues organic7.0% 6.5% 1.3% -1.6% 16.2% 2006 2007 2008 2009 2010 ATTRIBUTABLE NET INCOME DIVIDEND PER SHARE 4 R&D; R&D/Sales R&D expenses CAPEX; CAPEX / Sales Capex € / mln € / cent € / mln € / mln 165 R&D/Sales Capex / Sales 80,1 DPS Ord 44,6 DPS Sav 8.4% 23 22 3.7% 3.6% 3.5% 3.3% 7.0% 402 3.1% 6.3% 2006 2007 2008 2009 2010 5.7% 5.4% 22,9 285 262 17,6 16,0 16,5 224 217 147 148 145 146 No No 133 distribution distribution (348) 2 Olimpia in discontinued operations; excluding gain from 2006 2007 2008 2009 2010 sale of the 38.9% stake in Pirelli Tyre and the investment 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 Dividends 93 81 81 in Capitalia €/mln 3 Facility management and Photonics in discontinued Op; (1,167) including TI devaluation Pay out on Parent 93% 72% 93% SALES BY GEOGRAPHY 19 INDUSTRIAL PLANTS IN 11 COUNTRIES company net income INCOME BEF. DISCONTINUED OPERATION 1 1. USA 3. Germany 4. Italy 5% 4 DPS 2006-2009 restated following P&C shares reverse stock split with the ratio 6% 6% 6% 6% Rome Car Breuberg Car/Moto Bollate (MI) Car 1312 147 -2103 78 228 of 1 new share per each 11 old shares Asia/Pacific Merzig Steelcord Settimo Torinese Car/Truck 2. GB Figline Valdarno Steelcord 10% 10% 10% 10% 10% Burton Car 5. Romania NET DEBT GROSS DEBT 2010 YE Carlisle Car Slatina Car/Steelcord € / mln € / mln MEA 1,147 123.3 1 2 3 4 5 Committed 25% Line 27% 1,980 104 Central & 31% Drawdown South America 34% 34% 1,028 380 49 92 529 456 380 NAFTA 9% 2006 2007 2008 2009 2010 146.7 9% 6 8% 7 (302) Other european 8% 10% GEARING 11 8 New 5 year countries 10 42% n.m. 43% 21% 22% bond 9 Italy NET CASH FLOWS FROM 380 40% 38% Other 767 36% 33% OPERATING ACTIVITIES Borrowings 31% € / mln 628 11. Venezuel 6. Turkey 554 532 Guacara Car Izmit Car/Truck Steelcord 473 252 10. Brazil 11% 10% Campinas Car 7. China 9% 9% 9% Feira de Santana Car/Truck Yanzhou Car/Truck 2010 2011 2012 2013 2014 2015 2016 Santo Andrè Truck/Agro 76 2006 2007 2008 2009 2010 Gravatai Moto/Truck 9. Argentina 8. Egypt & beyond Sumarè Steelcord Merlo Car Alexandria Truck Consumer 69% 69% 68% 71% 70% 2006 2007 2008 2009 2010 Gross Debt 2010 22.0% 12.8% 8.0% 4.3% 9.1% 43.8% Industrial 31% 31% 32% 29% 30% Committed Year end Capacity (mln pz) 2010 % in low cost countries – 2010 % ON SALES OE 21% 24% 24% 23% 25% Line not Consumer 56.0 71% 9.8% 11.6% 1.6% 13.1% 13.0% Drawdown 1,200 mln € maturing in 2015 Replacement 79% 76% 76% 77% 75% Industrial 5.8 93% 1 2006-2009 figures restated excluding Pirelli RE and Pirelli & C. S.p.A. Consolidated Figures Pirelli Broadband Solutions (discontinued operations) Pirelli Tyre SALES1 EBIT1; EBIT MARGIN1 SALES 4,772 EBIT; EBIT MARGIN VOLUME 1 € / mln 4,848 € / mln € / mln € / mln 4,162 4,100 3,950 3,993 8.4% 4,239 4,171 9.5% 4,010 4,067 7.8% 7.4% 8.7% 8.6% 408 7.7% 453 6.1% 330 358 298 342 250 309 2.6% 3.7% 111 2006 2007 2008 2009 2010 151 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 ∆% yoy 8.7% 5.4% -1.5% -2.6% 19.5% Volume 3.9% 1.8% -6.0% -5.8% 7.3% ∆% ∆% Price/Mix 3.1% 4.7% 7.3% 4.2% 8.9% yoy +5.7% -1.6% -2.5% +19.2% yoy +10.7% -66.5% +126.0% +63.3% Revenues organic7.0% 6.5% 1.3% -1.6% 16.2% 2006 2007 2008 2009 2010 ATTRIBUTABLE NET INCOME DIVIDEND PER SHARE 4 R&D; R&D/Sales R&D expenses CAPEX; CAPEX / Sales Capex € / mln € / cent € / mln € / mln 165 R&D/Sales Capex / Sales 80,1 DPS Ord 44,6 DPS Sav 8.4% 23 22 3.7% 3.6% 3.5% 3.3% 7.0% 402 3.1% 6.3% 2006 2007 2008 2009 2010 5.7% 5.4% 22,9 285 262 17,6 16,0 16,5 224 217 147 148 145 146 No No 133 distribution distribution (348) 2 Olimpia in discontinued operations; excluding gain from 2006 2007 2008 2009 2010 sale of the 38.9% stake in Pirelli Tyre and the investment 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 Dividends 93 81 81 in Capitalia €/mln 3 Facility management and Photonics in discontinued Op; (1,167) including TI devaluation Pay out on Parent 93% 72% 93% SALES BY GEOGRAPHY 19 INDUSTRIAL PLANTS IN 11 COUNTRIES company net income INCOME BEF. DISCONTINUED OPERATION 1 1. USA 3. Germany 4. Italy 5% 4 DPS 2006-2009 restated following P&C shares reverse stock split with the ratio 6% 6% 6% 6% Rome Car Breuberg Car/Moto Bollate (MI) Car 1312 147 -2103 78 228 of 1 new share per each 11 old shares Asia/Pacific Merzig Steelcord Settimo Torinese Car/Truck 2. GB Figline Valdarno Steelcord 10% 10% 10% 10% 10% Burton Car 5. Romania NET DEBT GROSS DEBT 2010 YE Carlisle Car Slatina Car/Steelcord € / mln € / mln MEA 1,147 123.3 1 2 3 4 5 Committed 25% Line 27% 1,980 104 Central & 31% Drawdown South America 34% 34% 1,028 380 49 92 529 456 380 NAFTA 9% 2006 2007 2008 2009 2010 146.7 9% 6 8% 7 (302) Other european 8% 10% GEARING 11 8 New 5 year countries 10 42% n.m. 43% 21% 22% bond 9 Italy NET CASH FLOWS FROM 380 40% 38% Other 767 36% 33% OPERATING ACTIVITIES Borrowings 31% € / mln 628 11. Venezuel 6. Turkey 554 532 Guacara Car Izmit Car/Truck Steelcord 473 252 10. Brazil 11% 10% Campinas Car 7. China 9% 9% 9% Feira de Santana Car/Truck Yanzhou Car/Truck 2010 2011 2012 2013 2014 2015 2016 Santo Andrè Truck/Agro 76 2006 2007 2008 2009 2010 Gravatai Moto/Truck 9. Argentina 8. Egypt & beyond Sumarè Steelcord Merlo Car Alexandria Truck Consumer 69% 69% 68% 71% 70% 2006 2007 2008 2009 2010 Gross Debt 2010 22.0% 12.8% 8.0% 4.3% 9.1% 43.8% Industrial 31% 31% 32% 29% 30% Committed Year end Capacity (mln pz) 2010 % in low cost countries – 2010 % ON SALES OE 21% 24% 24% 23% 25% Line not Consumer 56.0 71% 9.8% 11.6% 1.6% 13.1% 13.0% Drawdown 1,200 mln € maturing in 2015 Replacement 79% 76% 76% 77% 75% Industrial 5.8 93% Many of the images used were produced by the students of NABA (Nuova Accademia di Belle Arti Milano) at Pirelli’s request. Graphic design Leftloft, Milan Printing Arti Grafiche Mario Bazzi S.p.A. Printed on Arctic Paper Munken Lynx The results’ documentation can be found online at www.pirelli.com Pirelli & C. S.p.A. — Milan Annual Financial Report at December 31, 2010 Volume 1 General information 5 CALL OF GENERAL MEETING The ordinary shareholders of Pirelli & C. Società per Azioni are called to the Ordinary and Extraordinary Sharehold- ers’ Meeting in Milan, Viale Sarca n. 214, − at 10:30 a.m. on Wednesday, April 20, 2011 on the first call; − at 10:30 a.m. on Thursday, April 21, 2011 on the second call, to discuss and resolve on the following AGENDA ORDINARY Part 1. Annual Report at December 31, 2010. Relevant and consequent resolutions. 2. Election of the Board of Directors: - determination of the number of seats on the Board of Directors; - determination of the term of the Board of Directors; - election of the Directors; - determination of the annual compensation of members of the Board of Directors; 3. Discussion of the General Policy for Group Remuneration. EXTRAORDINARY Part 1. Amendment of Articles 5 (Share Capital), 7 and 8 (General Meeting), 10 and 11 (Management), 16 (Board of Directors) of the Bylaws. Relevant and consequent resolutions. 2. Voluntary reduction of Share Capital by Euro 32,498,345.12, pursuant to Section 2445 Italian Civil Code, to be charged to Net Equity; consequent amendments to Article 5 of the Bylaws. Relevant and consequent resolutions. 6 Annual Financial Report at December 31, 2010 Volume 1 CONTENTS ANNUAL FINANCIAL REPORT AT DECEMBER 31, 2010 Volume 1 General information 5 Call of General Meeting 5 Summary of selected consolidated financial data 11 Pirelli & C.